Peter Hayes

FOR the past year, the hypothetical portfolio constructed for WA Business News has returned a negative 10 per cent on capital invested. This compares fairly consistently with general performance of superannuation for the past 12 months, which have shown a

THE equity portfolio that was constructed on WA-based ASX-listed companies for WA Business News had a lacklustre three-month period from June to September.

WITH the current climate of fear and loathing, a portfolio update is probably the last measure a manager would provide to reassure nervous investors.

WITH this, my last weekly column, I would like to analyse a company not based in WA that has performed exceptionally and is expected to continue that trend over the medium term.

TWO Perth companies worth keeping a close eye on at the moment are Schaffer Corporation and Loftus Pooled Development, companies that are related through mutual directors.

THE Australian share market is now six weeks into an eight-week profit-reporting season and with over 90 per cent of companies already reported, investors are looking forward with confidence about full-year prospects.

The market sentiment is gradually moving from caution to optimism, with investors showing a greater tendency to take on risk.

RESIDENTIAL housing prices are fuelling economic recovery stories both here and abroad, with news this week of a record 16.2 per cent rise in US home sales in January. The medium home price was up more than 10 per cent over the past year.

THE current reporting period is of particular interest to the novice investor, with company results bringing all sorts of market response. Recently, two companies with a strong WA flavour have reported with opposite reactions on the sharemarket.

THAT resilient natural resource that Western Australia parochially considers its own is finally back in the headlines – gold bullion.

THE current economic conditions of rising inflation, increased job advertisements and Reserve Bank meetings are all keeping interest rates firmly on the agenda.

THE multi-billion dollar company collapses continue in Wall Street, with another large company, Global Crossing, filing for Chapter 11 bankruptcy on Monday.

THE solid support for Australian equity market continued this week, with the ASX 200 closing Monday at 3400 points. With Wall Street retreating from its optimistic tone recently, the ASX has assumed the baton of leading 2002 with strong buying.

WITH the general optimism greeting equity investors this calendar year, it is an opportune time to speculate on a model portfolio of stocks for 2002.

AUSTRALIA’S competitive dollar will underpin the value of commodity exports this financial year, with earnings expected to rise 0.7 per cent from the previous period.

THE National Australia Bank’s monthly survey on business conditions suggests an Australian economy outpacing most of the world, with the growth momentum seen in the previous quarter moving into the December quarter.

THE expected 25 basis point drop in interest rates by the Reserve bank at its scheduled meeting on Tuesday continued the downward trend in rates.

THE US Federal Reserve is expected to cut interest rates for a final time in this cycle on December 11, with most pundits noting that the end of US interest rate cuts had historically led to a strong rally in equities over the subsequent year.

THE Australian share market opened on Tuesday spooked by news of another passenger plane crash in NewYork.

THE US market has been anticipating a 50 basis point cut by the Federal Reserve, which has pushed the Dow Jones and the Nasdaq on large rises lately.

THE reality of weak economic growth and the realisation of weak earnings has cast a cloud over the US markets after recent weeks of market enthusiasm.

THE sharemarket is expected to be fairly quiet leading up to the Federal election due on November 10.

US share markets have been surprisingly strong recently, ignoring terrorist threats and general international uncertainty.

AS investors watch the world markets with great interest, a double bottom scenario is looking more and more likely. Historically these are excellent buying opportunities in the share market, specifically for blue chip stocks.

US economic conditions should be booming. In August, tax rebate cheques worth $US17.495 billion were sent out to taxpayers in addition to $US6.779 billion in rebates distributed the previous month. And interest rates are at historically low levels.

AFTER one of the worst ever weeks on Wall Street, US stocks surged higher on Monday as the Dow Jones Industrial Index rose more than 4.46 per cent.

WITH the rhetoric of a patriotic rise in share prices on the US markets after the terrorist attacks, and the longest closure of the Dow Jones since World War 1, the markets resumed to sustained orderly selling.